FedEx To Buy Caliber System Inc.
Oct. 06, 1997
AKRON, Ohio (AP) _ Federal Express is buying the trucking company Caliber System Inc. for about $2.4 billion in stock, expanding Federal's ability to compete with package delivery rivals like United Parcel Service.
The deal announced today by the Memphis, Tenn.-based Federal Express comes as Atlanta-based UPS is still feeling some effects from a strike this summer by 185,000 Teamsters.
UPS had estimated that it lost 5 percent of its customers and $600 million in revenue during the strike.
The Federal-Caliber combination would generate $15 billion a year in revenue and employ 170,000 perople worldwide.
Caliber System's subsidiaries include Roadway Package System Inc., which delivers packages between businesses. It entered the market in 1985 after a customer survey showed there was room for competition with UPS.
``This acquisition creates a powerful combination that will propel both companies to new heights,'' Frederick W. Smith, chairman and chief executive of Federal Express, said in a statement.
Daniel J. Sullivan, chairman, president and chief executive for Caliber System, said Caliber's ``cost competitive, reliable service in the non-express market and use of leading-edge information systems will complement the FedEx brand.''
Federal Express provides delivery of 2.9 million items daily in 212 countries. It employs about 137,000 people and reported sales of $11.5 billion for the fiscal year ending May 31.
Caliber, which also provides logistics and related information services, employs about 33,500 employees and contractors.
Its other subsidiaries include Viking Freight Inc., a supplier of regional freight service in the West; Caliber Logistics Inc., a contract logistics provider; Roberts Express Inc., a critical-shipment carrier; and Caliber Technology Inc., a producer of system-wide information services.
Caliber, which reported sales of sales of $2.7 billion for the year ended Dec. 31, announced a restructuring in March of its money-losing Viking Freight division. The shakeup shut down two Viking regional divisions in the Northeast and Southeast, closing 83 trucking terminals.
Under the Federal Express deal, Caliber System shareholders will get 0.8 shares of stock in a new holding company FDX Corp. for each share of Caliber System stock.
The transaction is expected to be completed early next year, pending stockholder and government approval.
Caliber System headquarters in Akron will close after the deal is completed and the 150 employees there will be offered positions within the Federal Express empire.
Smith will be chairman, president and chief executive officer of the new FDX holding company.
Caliber's Sullivan will be president and chief executive officer of RPS Inc. Ted Weise will become president and chief executive officer of Federal Express.